A large risk, even the chance of a possible total loss of an investment for a potentially huge gain defines speculation. Investors can speculate on any company from the largest to a tiny startup. The odds and gains reach the most extreme among the junior and startup companies. By discussing this topic I hope to make beginning investors aware of the extreme and very real risk of total loss. No beginner should consider or have anything to do with any speculative investing play.
Classifying investment strategies into five broad groups arranged low to high risk, Income, Value, Growth, Trading, Speculation, helps new investors understand some of their many investment choices. Choosing from these investing strategies can set you on the path to financial security. While there are numerous variations within each broad strategic group; no strategy offers the impossible: risk free investing.
Costs drive investor position sizes. Minimum positions for affordable costs keep costs per share low. Investors know minimum position sizes for affordable costs. This second sizing factor gets the transaction costs right. This effectively puts a financial barrier or threshold in place for owning an individual share position.
Investing academics and holding counts in multiple studies conclude 16 stocks are the ideal number, with 5% to 7% of a portfolio held in each position. The range is surprisingly narrow. Most suggest between 15 and 20 stocks as the best number. You and your top research assistant, Google, can find endless numbers of studies.
Considering how many stocks to hold ranges between 5 to 30 stocks with an exception. There are 5 Factors to consider: Number of holdings, Size of positions, Diversification, Risk and Psychology. This post is part 1 of the 6 part White Top View series, Introductory Portfolio Management – Counts and Sizes.
Sorting American Stock Markets On the OTC Market you can buy stocks in about 10,000 mostly small companies or startup ventures from broker-dealers in the OTC Markets Group. So named as the Over The Counter market. Headquartered in New York but using a distinct operating model that spans the US.
Investors can ride growth stocks with traders. Strategies differ, but income seekers can join traders seeking gain by riding growth stock opportunities. Both income and equity growth seekers can find growth stocks that produce results.
6 Lessons From A Speculation Loser. Let this be a lesson for you! Speculations fail fast, courts kill money, never average down, sell losers, psych games cost, litigation is risky.
Investing trading and speculating differ; in both approach taken to the market and how long a position gets held each strategy has fundamental differences.
The trading approach to the stock market lies in the middle of the risk spectrum while overlapping the other basic approaches. That puts it between a conservative investing strategy based on profit making companies and aggressive speculative strategies. For consistency we will refer to all plays that accept high risk seeking significant short term rewards […]